Schwab

In the 1990's, web-enabled technology provide a new cluster of customers that prefer to manage their assets independent of brokerage houses and financial advisors. However, this was a period of intense growth in the overall economy; growth that were directly related to the growth in the technology sector. The result was that individuals, and companies, had more money to invest and needed the necessary external resources to accomplish this goal. Schwab was able to capitalize on this need by quickly introducing on-line brokerage services. As the economy began to spiral downward, the question became could Schwab continue to grow its business within the context of the new cycle the economy finds itself, while maintaining the core of its business model to provide quality service at a lower cost.

To achieve this goal Schwab had to be dynamic and quick in its response to customers' needs. Schwab introduced its internet brokerage services in 1996, but it was not until 1998 when the company began showing significant returns on this investment. By 2000, the company also increases the number of accounts it was servicing by about 1,000% to 13 million. The online brokerage service resulted in savings of over $100 million annually. With such intense growth Schwab continue to invest in technology by acquiring CyberTrader, which had software that "provided an easy-to-use, point-and-click advance-execution platform" to facilitate online trading.

To grow the business Schwab not only relies on technology for service efficiency, and as a cost reduction. In 2000 Schwab was vigilant over the changing demographics, particularly the baby boomers generation that was coming of age. Schwab recognized the affluence of this segment, as well as its investing needs. Schwab acquired U.S. Trust in 2000 in an effort to capitalize on this segment of the investing population. In this same year, Schwab's gross revenue hit an all time high of $5.8 billion. However, a slumping economy in 2001 resulted in a 25% decline in revenue. Interestingly, Schwab's quarterly reports indicate that the 4th quarter reduction was only 3.6% from the average for the prior three quarters, indicating that there were more going on in the economy other than the events of September 11, 2001.

Schwab's success to 2002, is clearly marked by its ability to identify underserved segments of the population of investors and potential investors, as indicated